Should the USA Auto Industry be bailout?

Global economy experts preach – NO BAILOUTS, NO HANDOUTS, NO SUBSIDIES.

In a global marketplace each country will find appropriate industries in which they’ll thrive, and they will adapt to survive.

However, usually politics, and lobbyists become invovled, and often the pain and hardship experienced by sizable communities during the shakeout cause short term remedies, which perpetuate the imbalances.

The US auto industry has NOT been able to compete on features, price, or styling for decades, and outside of the US you see very few American cars – apart from the notalgic classics.

For the US – with citizens with a high hourly wage (on a global basis) – there has to be a general trend away from manufacturing (which can always be done cheaper somewhere else) into knowledge and leadership enterprises where the labour component is only a small peice of the overall price.

That’s the global economic view, but unfortunately, that leaves a large local workforce that is either unskilled, or only skilled in obsolecent technologies, and at a local level its PEOPLE that feel the pain of a changing economy.

A one-off bailout would only be appropraite if the government somehow beleived that the US auto industry could then retool itself and create cars that people wanted at affordable prices at global level.

A prolonged subsidy would only be appropriate if this industry was considered a “way of life’ that the US wanted to continue.

A handout ? Well isn’t that called the unemployment benefit anyway ? It’ll be coming one way or the other.

Again can I have some of this bailout money? I need to pay for my trip to Australia.

On the subject of the US auto market I don’t know if they need a bailout but they need to learn to adapt.

American International Group Inc. reportedly is seeking a new bailout from the U.S. government less than two months after the Federal Reserve came to the insurance giant’s rescue with an $85 billion loan, according to a published report.

The Financial Times reported on its Web site late Friday, citing people close to the situation, that AIG (AIG:American International Group, Inc News, chart, profile, more executives were in negotiations Friday night with authorities over a plan that could involve a debt-for-equity swap and the government’s purchase of mortgage-backed securities from AIG.

The FT said talks might still collapse, but noted that the insurer was pressing for a decision before it posts third-quarter results on Monday.

American International Group Inc. is expected to report third-quarter loss of 90 cents a share, according to analysts surveyed by Thomson Reuters.

Leading industry analysts have said that turmoil in equity and credit markets has been hampering AIG’s efforts to sell some of its businesses, a crucial part of the insurer’s plan to repay billions of dollars in expensive government loans.

Rival insurers that may be considering bidding for AIG businesses are now facing their own problems as slumping stock prices and wider credit spreads cut into capital, Andrew Kligerman of UBS wrote to investors about a week ago.

That’s slowing what investors hoped would be fast asset sales by AIG, possibly preventing the insurer from quickly repaying the Federal Reserve’s loan, the analyst wrote.

Wider credit spreads may be triggering more demands for AIG to post collateral to support the credit default swaps it wrote. That likely increases the amount of money the insurer has to borrow from the Fed, which, in turn, means even more asset sales, the analyst explained.
Kligerman said he expected that AIG would take about $25 billion in write-downs on its credit default swap exposures when the insurer reports third-quarter results.

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here’s a thought, “live within your means”

I wonder when the PEOPLE will get a bailout? :sarcasm: This is from last month.

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Troubled mortgage loans seem to be getting all the press lately, but bad credit card debt is following close behind. The US Congress will vote today on a revised bailout plan that could allow the Treasury Secretary to take possession of securities backed by auto loans and credit card debt.

The consumer credit market is currently worth $2.6 trillion. But delinquent credit card debt has risen 20% in the past year alone. And with job cuts and bankruptcies affecting more and more Americans, defaults and delinquencies are only expected to get worse. As a result, the value of all that credit card debt will plummet.

More credit card payments are 90 days or more behind schedule than have been since 1991. Compared to a year ago, banks are writing off 40% more of this debt as uncollectible.

All of this bad credit card debt trickles down to individual card holders in the form of lower credit limits, tougher standards for obtaining credit, and more aggressive debt collection.

Will the bailout plan be enough to help the credit industry? Martin Weiss, founder of Weiss Research, said, “When you sum up all the debt sectors and all the potential for bad debt, you recognize that $700 billion is a drop in the bucket.”

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@slotplayer 185190 wrote:

The question is:
Does he drive a GM, a Ford or a non-US manufactured car?

Here is one like his, but his is a 2006. He gets a discount. ” title=”” class=”bbcode_smiley” />

I’m still trying to wrap my head around how we got to the point where the entire world is having a financial crisis! How did it get to this point and who allowed this to happen? Does ANYONE here have a way to explain it to me?

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China announced a huge economic stimulus package Sunday aimed at bolstering its weakening economy and, in the process, perhaps helping to counter the effects of the global economic slowdown.

In a sweeping move, Beijing said it would spend an estimated $586 billion by 2010 on wide array of national infrastructure and social welfare projects. They would include new railroads, subways and airports and rebuilding areas like those devastated by the Sichuan earthquake in May.

On Saturday, Hu spoke by telephone with President-elect Barack Obama about issues including the global financial crisis and how China and the United States might cooperate to help resolve economic problems, according to the Chinese state-run news media.

At home, Beijing is struggling to cope with a rapidly slowing economy. After five years of growth in excess of 10 percent, the Chinese economy is weakening because of slowing export and investment growth, declining consumption and severely depressed stock and property markets.

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Well Slot, maybe I’m trying to recapture the days of the mid 60 muscle cars. ie. 63 vet, 66 GTO, I loved them, actually I’m thinking of getting a 65 or 66 GTO and rebuilding parts of it, but as far as you line “I’m a firm believer in merit raises and not across the board raises.”

I am with you 100% and even though I am a union member, I couldn’t agree more, Unions do suck and they are getting worse. I think most people would agree too that they have no right to use out dues for any political part, either way. we need a say so in that.

But the bail out thing, No More, I am tired of this BS, I don’t care who does. Taxation without representation was one of out battle cry’s back in the 70’s, the 1770’s.

This has nothing to do with this posy, but a friend of mine is a detective and he just called me and suggested I be more careful in locking up the house. He said with many ppl pulling their $$ out of the banks and keeping it in their homes, that break ins shot up big time, thought I’d pass that on.

This is a good opinion piece by Thomas Friedman on the auto situation http://www.nytimes.com/2008/11/12/opinion/12friedman.html?hp

especially this bit about health care which is very true:

And please, spare me the alligator tears about G.M.’s health care costs. Sure, they are outrageous. “But then why did G.M. refuse to lift a finger to support a national health care program when Hillary Clinton was pushing for it?” asks Dan Becker, a top environmental lobbyist.